1. National Center for Higher Education Management Systems 3035 Center Green Drive, Suite 150 Boulder, Colorado 80301 Cost Driver Analysis: General Approach to the Work Expert Team Meeting Denver, Colorado August 27, 2014

2. The Challenge Find a way to convey to policymakers and the general public –The factors that determine the costs of educating a student and why those costs differ in different types of institutions –The factors that determine prices charged to students –The extent to which Colorado institutions have managed to control cost and prices Put state appropriations in the context of overall institutional finance Base the story line on sound analyses Build trust by increasing transparency of cost and pricing considerations 2

3. Cost Driver Analyses – General Approach Separate analyses for different types of institutions – tentatively –Research 1 –Research 2 –Other 4-year –2-year Identify those factors that explain most of the variation in cost Compare Colorado institutions to other, similar institutions on these variables Work hard at developing graphic presentations that tell the story 3

4. General Approach Conduct majority of analyses using national data –Cast a wide net Add granularity by using data compiled from CDHE and institutions –Every effort made to minimize impact on institutions Address cost driver analyses first, pricing second –Inform mission metric decisions in funding model 4

5. Cost Driver Analyses Dependent variables 1.Expenditures on instruction 2.Expenditures on student-related functions Instruction Student services [I/(I+P.S+Res)] Academic Support 5

6. Independent Variables A.Basic institutional characteristics 1.Sector (Carnegie classifications) 2.Locale Rural Small town Suburban Urban 3.Median wages of county/area in which institution is located 4.Size – annual FTE enrollment 6

7. Independent Variables (continued) B.Student characteristics 1.Preparation – entering ACT/SAT 2.% Part-time 3.% Pell 4.% Underrepresented minorities Hispanic African-American American Indians 5.% older than 25 6.% of entering students requiring remediation 7.% headcount enrollments that are graduate and professional 7

8. Independent Variables (continued) C.Program characteristics 1.% FTE enrollment that is graduate & professional 2.Breadth of undergraduate programs Number of UG programs (6-digit) with completers 3.Breadth of graduate programs Number of graduate programs (6-digit) with completers 4.Concentration of programs in high cost fields Weighted degrees/un-weighted degrees Undergraduate & graduate separate 5.Research emphasis Research expenditure per FT Faculty or relative to instruction expenditures 6.Med/Vet school 7.Land Grant status 8

9. Independent Variables (continued) D.Staffing related factors 1.Number of staff by category Faculty – FT/PT Executive & managerial Other professional Technical Clerical Service 2.Salaries Faculty (by rank) Administrators 3.Benefits As % of compensation 9

10. Independent Variables (continued) E.Delivery method factors* 1.Class/section size distribution Common data set for total By 2-digit CIP & Level 2.Number in each category taught by FT Faculty PT Faculty 3.Number and proportion of SCH taught by FT Faculty By level 4.Number and percent of credit hours taught on-line Graduate Undergraduate 10 *Not available from national sources.

11. Independent Variables (continued) F.Success Factors –Completions by level and 2-digit CIP –Proportions awarded to Pell recipients Level and disc. –Graduation rates 100% 150% 200% –Retention Rates –Number of students completing 30, 60, 90 credits (4-year) –Number of students completing 15, 30, 45 credits (2-year) –Number of transfer with ≥30 credits 11

12. Independent Variables (continued) G.Facilities related factors 1.Annual depreciation amount 2.Replacement value 3.Gross area 4.Net area 12

13. Independent Variables (continued) H.Unrestricted revenues –Revenues from Tuition and fees State appropriations Local government appropriations –Provides the data to demonstrate “Bowen’s Law” 13

14. Data Needed to Address Specific Items in the RFP G.Uncontrollable or “mandated” costs - operating Line item expenditures, by function 14 InstructionResearch……………Total Salaries Benefits Op. Expenses Supplies Utilities Insurance Other Capital items Most current & 5 years prior

15. Data Needed to Address Specific Items in the RFP H.Expenditures on facilities and relationship to student fees Funding of facilities construction & maintenance –Separate for Academic (Inst., Res., P.S.) Administration Recreation –Athletics –Other (Student Union, etc.) Auxiliary Enterprises – other than athletics/recreation –Omit hospitals 15 Revenue SourceCapitalMaintenance State Appropriation – Cap State Appropriation – General Fund Federal Gifts Student Fees Use charges – Last 5 years

16. Data Needed to Address Specific Items in the RFP I.The use of institutional financial assistance & scholarships at various institutions 16 UndergraduateGraduate Scholarship Payments ($’s come into institutions) Waivers